Core Insights - Spartan Capital Securities, LLC successfully completed a $15.2 million private placement for Healthcare Triangle, Inc. to support its expansion and digital transformation initiatives in the healthcare and life sciences sectors [1][2]. Group 1: Financial Details - The proceeds from the private placement will be utilized for strategic acquisitions, general corporate purposes, and working capital needs, enhancing Healthcare Triangle's mission in cloud enablement, cybersecurity, and data analytics solutions [2]. - Spartan Capital Securities played a significant role by placing $14.2 million of the total private placement, highlighting its strong position in the investment banking sector [2]. Group 2: Company Statements - John Lowry, CEO of Spartan Capital Securities, expressed honor in serving as Co-Placement Agent for Healthcare Triangle, emphasizing the company's leadership in digital innovation within healthcare and life sciences [3]. - The successful transaction reflects both Healthcare Triangle's strong vision and Spartan Capital's commitment to facilitating meaningful investment opportunities [3]. Group 3: Legal and Compliance - The securities involved in the offering, including common stock and various warrants, have not been registered under the Securities Act of 1933 or any state securities laws, and cannot be offered or sold in the U.S. without registration or an applicable exemption [4].

Financial Performance - Net revenue for the three months ended September 30, 2024, was $2,413,000, a decrease of 69.0% compared to $7,779,000 for the same period in 2023[13]. - Net loss for the three months ended September 30, 2024, was $1,249,000, compared to a net loss of $1,943,000 for the same period in 2023, representing a 35.7% improvement[13]. - Total revenue for the three months ended September 30, 2024, was $2,413 thousand, a decrease of 69% compared to $7,779 thousand in the same period of 2023[39]. - For the nine months ended September 30, 2024, total revenue was $9,506 thousand, down 64% from $26,143 thousand in the same period of 2023[39]. - The company reported a net loss of $1,247 thousand for the three months ended September 30, 2024, an improvement of 36% compared to a net loss of $1,939 thousand in 2023[40]. - Net income for the nine months ended September 30, 2024, was a loss of $4,621,000, an improvement from a loss of $7,007,000 in the same period of 2023, representing a 34.5% reduction in losses[16]. Assets and Liabilities - Total current assets decreased to $1,784,000 as of September 30, 2024, down from $5,294,000 as of December 31, 2023, a decline of 66.3%[12]. - Total liabilities decreased to $6,584,000 as of September 30, 2024, from $9,076,000 as of December 31, 2023, a reduction of 27.5%[12]. - Cash and cash equivalents significantly decreased to $28,000 as of September 30, 2024, from $1,234,000 as of December 31, 2023[12]. - Total stockholders' equity (deficit) as of September 30, 2024, was $(1,818,000), compared to $538,000 as of December 31, 2023[12]. Operating Expenses - Operating expenses for the three months ended September 30, 2024, were $1,889,000, down from $3,231,000 for the same period in 2023, a decrease of 41.6%[13]. - Research and development expenses for the three months ended September 30, 2024, were $175,000, compared to $1,101,000 for the same period in 2023, a decrease of 84.1%[13]. - General and Administrative expenses decreased by $0.3 million, or 21%, to $1.1 million for the quarter ended September 30, 2024, compared to $1.4 million for the same period in 2023[178]. - Interest expenses decreased by $0.3 million, or 81%, to $0.08 million for the quarter ended September 30, 2024, compared to $0.42 million for the same period in 2023[180]. Revenue Breakdown - Software Services revenue for the three months ended September 30, 2024, was $775 thousand, a decline of 84% from $4,918 thousand in 2023[39]. - Managed Services and Support revenue decreased by 36% to $1,571 thousand for the three months ended September 30, 2024, compared to $2,456 thousand in 2023[39]. - Platform Services revenue fell 83% to $67 thousand for the three months ended September 30, 2024, down from $405 thousand in 2023[39]. - Revenue from Software Services decreased by $4.1 million, or 84%, to $0.8 million for the quarter ended September 30, 2024, compared to $5.0 million for the same period in 2023[183]. - Cost of Revenue decreased by $4.4 million, or 72%, to $1.7 million for the quarter ended September 30, 2024, compared to $6.1 million for the same period in 2023[174]. Customer Concentration - The top five customers contributed 61% of total revenue for the three months ended September 30, 2024, with the largest customer accounting for 21% of revenue[41]. - Revenue from the top five customers accounted for approximately 61% of total revenue for the quarter ended September 30, 2024, down from 78% in the same quarter of 2023[84]. Cash Flow and Financing - Net cash used in operating activities was $(270,000) for the nine months ended September 30, 2024, compared to $(2,750,000) in the same period of 2023, indicating a significant improvement in cash flow[16]. - Cash outflow from financing activities was $(1.1) million for the six months ended September 30, 2024, compared to an inflow of $1.5 million for the same period in 2023[194]. - The company issued senior secured convertible promissory notes totaling $5,200,000, resulting in gross proceeds of up to $4,420,000 due to the original issue discount[27]. Corporate Governance and Compliance - The Chief Financial Officer has certified compliance with the Securities Exchange Act of 1934, ensuring financial reporting accuracy[31.2]. - The certifications by the Chief Executive Officer and Chief Financial Officer demonstrate a commitment to corporate governance and accountability[31.1][32.2]. - The company is currently evaluating the impact of new accounting standards on its consolidated financial statements, including ASU 2021-08 and ASU 2021-10[118][119]. Strategic Focus - The company emphasizes its focus on digital transformation in the healthcare sector, leveraging technologies such as AI, ML, and IoT to enhance operational efficiency[21]. - The company aims to shift focus towards Managed Services and Support and Platform Services to drive long-term revenue growth and enhance customer retention[184]. - The company expects to increase its research and development expenses as it focuses on developing new product offerings and enhancing existing ones[158]. - The company anticipates that its sales and marketing expenses will continue to increase in absolute dollar terms as it strategically invests to expand its business[160]. Employee and Operational Metrics - The company has a total of 22 full-time employees and 114 sub-contractors, including 90 certified cloud engineers as of September 30, 2024[137]. - The company operates from two office locations leased by the parent and has paid rent of $34 for the quarter ended September 30, 2024, down from $67 for the same quarter in 2023[97]. Taxation - The Company's total income tax expense for the quarter ended September 30, 2024, was $8,000, compared to $28,000 for the same quarter in 2023, reflecting a decrease of 71.43%[115]. - The effective tax rate for the quarter ended September 30, 2024, was 0%, consistent with the rate for the same quarter in 2023[116]. Shareholder Information - The company issued 50,000 shares for services during the three months ended September 30, 2024[14]. - The weighted average shares outstanding used in per common share computations for the three months ended September 30, 2024, was 5,666,781[13]. - The company has a Warrant liability of $1,333 at fair value as of September 30, 2024[108]. Legal and Regulatory Matters - The company is not involved in any legal proceedings that are expected to have a material adverse effect on its business or financial condition[120]. - The company has not experienced major impacts from COVID-19 during the quarter ended September 30, 2024, and has managed to service its debt and obligations on time[144].

Core Viewpoint - Zacks Investment Research has initiated coverage of Healthcare Triangle, Inc. (HCTI) with an "Underperform" recommendation due to significant financial challenges and concerns about future growth prospects and liquidity [1] Company Overview - Healthcare Triangle, based in Pleasanton, CA, operates in the healthcare information technology sector, providing cloud services, data science, and managed services to healthcare and life sciences industries [2] Financial Performance - In Q2 2024, Healthcare Triangle's revenues fell by 65% year over year to $2.9 million, driven by an 87% decline in its Software Services segment [3] - The company reported a net loss of $1.5 million in Q2 2024, an improvement from a loss of $1.8 million in the previous year, but still presents ongoing risks to investor confidence [3] Liquidity and Financial Risks - As of June 2024, HCTI's cash reserves have dwindled to $29,000, with short-term borrowings of $1.7 million and total liabilities of $6.2 million, indicating severe liquidity issues [4] - The company relies heavily on external funding, which may lead to shareholder dilution and additional downward pressure on the stock [4] Customer Concentration and Growth Risks - HCTI's revenue is heavily dependent on a few large clients, with 68% of Q2 revenues coming from its top five customers, creating vulnerability to potential contract losses [5] - The financial statements include a going concern warning, raising significant investor concerns about the company's long-term viability [5] Potential Growth Opportunities - Healthcare Triangle's expertise in cloud services and artificial intelligence solutions presents growth potential, especially as the healthcare sector prioritizes digital transformation [6] - The company's Software-as-a-Service offerings, such as CloudEz and DataEz, are scalable and generate recurring revenues, which could enhance financial stability [6] - Efforts to diversify the customer base from reliance on a few large clients to a broader range of mid-size healthcare organizations may reduce individual customer risks [6] Market Performance - HCTI's stock has underperformed compared to industry peers and the broader market over the past year, reflecting investor concerns about its financial health and growth prospects [7]

Financial Performance - Net revenue for the three months ended June 30, 2024, was $2,984 thousand, compared to $8,526 thousand for the six months ended June 30, 2024, representing a decrease of approximately 65% year-over-year[12]. - The cost of revenue for the three months ended June 30, 2024, was $2,086 thousand, while for the six months it was $6,579 thousand, indicating a significant increase in costs[12]. - Total operating expenses for the three months ended June 30, 2024, were $2,276 thousand, down from $3,542 thousand for the six months, reflecting a reduction of about 36%[12]. - The net loss for the three months ended June 30, 2024, was $1,510 thousand, compared to a net loss of $1,786 thousand for the six months, showing a slight improvement[12]. - The company reported a loss from operations of $1,378 thousand for the three months ended June 30, 2024, compared to a loss of $1,595 thousand for the six months, indicating a narrowing of losses[12]. - Net income for June 2024 was a loss of $3,372,000, an improvement from a loss of $5,064,000 in 2023, indicating a reduction in losses[15]. - The weighted average shares outstanding used in calculating net loss per common share for the three months ended June 30, 2024, was 5,616,781 shares, resulting in a net loss per share of $(0.28)[12]. - Basic and diluted earnings per share (EPS) for the quarter ended June 30, 2024, were $(0.28), an improvement from $(0.42) in the prior year[118]. Revenue Breakdown - Total revenue for the three months ended June 30, 2024, was $2,984,000, a decrease of 65% compared to $8,526,000 in the same period of 2023[34]. - Software Services revenue for the six months ended June 30, 2024, was $2,235,000, down 81% from $11,643,000 in the same period of 2023[34]. - Managed Services and Support revenue for the three months ended June 30, 2024, was $2,253,000, a decrease of 21% from $2,865,000 in the same period of 2023[34]. - Revenue from the top five customers accounted for approximately 68% of total revenue for the quarter ended June 30, 2024, down from 81% in the same quarter of 2023[73]. - The top customer contributed 31% of revenue for the three months ended June 30, 2024, amounting to $925,000, down from 53% and $4,519,000 in the same period of 2023[36][38]. Cash Flow and Liquidity - Cash flows from operating activities showed a net cash used of $985,000 in June 2024, compared to $2,750,000 in the same period of 2023, reflecting improved cash management[15]. - The company reported cash and cash equivalents at the end of the period of $29,000, down from $132,000 in 2023, indicating a significant decrease in liquidity[15]. - The total short-term borrowing as of June 30, 2024, is $1,726, a decrease from $3,429 as of December 31, 2023[98]. - The company has a substantial level of indebtedness, which poses risks to its financial stability and ability to repay debt[6]. Investments and Future Prospects - Future growth prospects depend on the company's ability to attract and retain customers, develop new solutions, and manage competition effectively[6]. - The company is focused on maintaining high customer retention rates and enhancing its brand presence in the market[6]. - The parent company, SecureKloud Technologies, Inc., is willing to invest an additional $5 million in equity to support the company's working capital and investment requirements[25]. - The company anticipates gross proceeds of up to $4,420,000 from the issuance of senior secured convertible promissory notes, with an initial tranche of $2,000,000 already issued[24]. - The company has sold $956,000 of shares through its ATM Sales Agreement and plans to utilize an additional capacity of $1,444,000 in the near future[23]. Operational Efficiency - Research and development expenses for the three months ended June 30, 2024, were $207 thousand, while sales and marketing expenses were $631 thousand, highlighting ongoing investment in these areas[12]. - The company is focused on digital transformation in the healthcare sector, leveraging technologies such as AI, ML, and IoT to improve operational efficiencies[18]. - The impact of COVID-19 has not materially affected the company's financial condition, but it has accelerated the adoption of digital solutions in the healthcare sector[20]. Acquisitions and Goodwill - The company has consolidated financials from its acquisition of Devcool, Inc., which enhances its capabilities in solving complex technology problems in the healthcare industry[19]. - The aggregate purchase price for the acquisition of Devcool Inc was $7,773, including $4,500 in cash and $700 in equity[85]. - The Company recorded $1,289 of goodwill from the acquisition of Devcool, which is not tax deductible[88]. - The Company fully impaired goodwill in Q4 FY 2023 due to the loss of a major customer[59]. Shareholder Information - The company has issued warrants convertible into common stock at a price of $7.99 per share, with none exercised as of June 30, 2024[92]. - As of June 30, 2024, the company has 967,256 outstanding warrants with a weighted average exercise price of $7.99 and an aggregate intrinsic value of $3,785[95]. - The company reported a warrant liability of $1,333 at fair value as of June 30, 2024, with the estimated fair value of common stock warrants at $3.91[97]. - The company has not declared or paid any dividends and does not plan to do so in the foreseeable future[109]. Tax and Compliance - The company's effective tax rate is 0% for the quarter ended June 30, 2024, consistent with the previous year[102]. - The company has no uncertain tax positions requiring recognition as of the date of these financial statements[100]. - The company is currently evaluating the impact of new accounting pronouncements on its consolidated financial statements[105]. Internal Controls and Risk Management - There were no changes to internal control over financial reporting during the three months ended June 30, 2024, that materially affected the company's controls[178]. - The company did not utilize derivative financial instruments to manage interest rate risks, indicating a conservative approach to market risk[177].

Financial Performance - Net revenue for Q1 2024 was $4,109,000, a decrease of 58% compared to $9,838,000 in Q1 2023[21] - Net loss for Q1 2024 was $1,862,000, compared to a net loss of $3,278,000 in Q1 2023, representing a 43.2% improvement[21] - Revenue for the quarter ended March 31, 2024, was approximately $4.1 million, a decrease of $5.7 million or 58% compared to $9.8 million for the quarter ended March 31, 2023[159] - Basic and diluted EPS for the quarter ended March 31, 2024, were $(0.42) and $(0.42) respectively, compared to $(0.79) for the same period in 2023[154] - The total segment operating loss improved by 89% to $(115,000) from $(1,046,000) in the prior year[52] Revenue Breakdown - Software services revenue decreased by 33% to $2,025,000, managed services and support revenue decreased by 69% to $1,996,000, and platform services revenue decreased by 74% to $88,000[51] - Revenue from Software Services decreased by $3.6 million, or 82%, to $0.79 million for the quarter ended March 31, 2024, compared to $4.4 million for the same period in 2023[196] - Revenue from the top five customers accounted for approximately 70% of total revenue for the quarter ended March 31, 2024, down from 80% in the same quarter of 2023[90] - Revenue concentration from the top five customers for the three months ended March 31, 2024, shows Customer 1 contributing 20% and Customer 2 contributing 18%[53] Expenses and Cost Management - Operating expenses decreased by 43.3% from $4,802,000 in Q1 2023 to $2,722,000 in Q1 2024[21] - Research and development expenses were $127,000 in Q1 2024, down from $539,000 in Q1 2023, a reduction of 76.5%[21] - Marketing and advertising expenses for the quarters ended March 31, 2024, and March 31, 2023, were $268,000 and $214,000 respectively[89] - General and administrative expenses decreased by $0.4 million, or 28%, to $1.2 million for the quarter ended March 31, 2024, compared to $1.6 million for the same period in 2023[200] - Sales and marketing expenses decreased by $0.9 million, or 50%, to $0.88 million for the quarter ended March 31, 2024, compared to $1.7 million for the same period in 2023[199] Assets and Liabilities - Total current assets decreased by 44.6% from $5,729,000 as of December 31, 2023, to $3,169,000 as of March 31, 2024[19] - Total liabilities decreased by 22.4% from $9,511,000 as of December 31, 2023, to $7,383,000 as of March 31, 2024[19] - The company has a total outstanding debt of $1,250,000 as of March 31, 2024, down from $2,000,000 as of December 31, 2023, after repaying $787,000 of convertible promissory notes during the quarter[113][114] - Cash and cash equivalents decreased from $1,234,000 at the beginning of Q1 2024 to $301,000 at the end of the period[25] Financing and Investment - The company issued 417,395 shares during Q1 2024, increasing additional paid-in capital to $26,256,000[23] - An institutional investor has agreed to purchase convertible promissory notes totaling up to $5,200,000, resulting in gross proceeds of up to $4,420,000 for the Company[37] - The Parent Company, SecureKloud Technologies, Inc., is willing to invest an additional $5 million in equity to support the Company's working capital and investment requirements[38] - The Company has sold $956,000 of shares through the ATM Sales Agreement and plans to sell an additional capacity of approximately $500,000[36] Operational Insights - The company continues to focus on digital transformation solutions for the healthcare sector, leveraging technologies such as AI and Big Data[28] - The Company operates in three distinct reportable segments: Software Services, Managed Services and Support, and Platform Services[47] - The company aims to shift focus towards Managed Services and Support and Platform Services to drive long-term revenue growth and enhance customer retention[206] Future Outlook - The company plans to continue investing in sales and marketing to promote its solutions, anticipating an increase in employee strength due to these investments[168] - Research and development expenses are expected to increase in absolute dollars as the company focuses on developing new product offerings and enhancing existing ones[181] - General and administrative expenses are anticipated to increase to support business growth, although they are expected to decrease as a percentage of revenue over the long term[186] - The company expects that the recent financing transactions will positively impact stockholders' equity by Q4 2024[37]

PLEASANTON, Calif., April 04, 2024 (GLOBE NEWSWIRE) -- Healthcare Triangle, Inc. (NASDAQ:HCTI) ("Healthcare Triangle," "HCTI" or the "Company"), a leading provider of healthcare IT solutions, is thrilled to announce its partnership with Cynomi, a pioneer vCISO platform vendor. This collaboration introduces an innovative Virtual Chief Information Security Officer (vCISO) service tailored specifically for the healthcare provider market, setting a new standard in cybersecurity and compliance. The vCISO platfor ...

PLEASANTON, Calif., April 03, 2024 (GLOBE NEWSWIRE) -- Healthcare Triangle, Inc. (NASDAQ:HCTI) ("Healthcare Triangle," "HCTI" or the "Company"), In a pioneering move, a leading health system has partnered with Healthcare Triangle to utilize a groundbreaking cloud-based AI and machine learning solution. This collaboration establishes a revolutionary benchmark in the management and utilization of patient data, ultimately elevating the standards for enhanced care delivery. The deployment of an advanced AI solu ...

Part I [Business](index=8&type=section&id=Item%201.%20Business) The company provides specialized IT solutions including cloud, data, and managed services for the Healthcare and Life Sciences industry - HTI provides IT solutions for the Healthcare and Life Sciences industry, focusing on cloud transformation, data analytics, and EHR services[29](index=29&type=chunk)[30](index=30&type=chunk) - The company's core offerings include proprietary technology platforms: **CloudEz** for multi-cloud management, **DataEz** for data analytics, and **Readabl.ai** for extracting information from unstructured documents using AI/ML[33](index=33&type=chunk)[52](index=52&type=chunk) - HTI's primary revenue is generated from software services and managed services, with a strategic shift towards a **SaaS subscription model** for recurring revenue[35](index=35&type=chunk) - As of December 31, 2023, **SecureKloud Technologies, Inc. owns approximately 59.18%** of the company, making HTI a "controlled company"[36](index=36&type=chunk) - The company has premier partnerships with major public cloud providers including **Amazon Web Services (AWS), Google Cloud, and Microsoft Azure**, as well as EHR vendors[38](index=38&type=chunk) [Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from intense competition, dependency on third-party providers, cybersecurity threats, and complex regulations - The company faces **intense competition** from firms with greater financial, technical, and marketing resources, which could lead to loss of clients[73](index=73&type=chunk) - Operations are **heavily dependent on third-party data centers** (AWS, Google Cloud, Microsoft Azure), and any service interruption could significantly harm the business[74](index=74&type=chunk) - As a "controlled company" with its parent owning **59.18% of common stock**, there is a risk of influence over business affairs and exemption from certain Nasdaq governance requirements[77](index=77&type=chunk)[154](index=154&type=chunk) - The business is subject to significant **cybersecurity risks**, including data breaches of confidential healthcare information, which could result in litigation and fines[78](index=78&type=chunk)[80](index=80&type=chunk) - The company operates in a highly regulated healthcare industry and is subject to complex laws like **HIPAA, HITECH, and GDPR**, with non-compliance leading to severe penalties[110](index=110&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - Revenue is highly concentrated, with the **top five customers accounting for 77% of revenue** in fiscal year 2023, making the loss of any of these customers a material risk[95](index=95&type=chunk) [Unresolved Staff Comments](index=39&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[165](index=165&type=chunk) [Cybersecurity](index=39&type=section&id=Item%201C.%20Cybersecurity) The company employs a multi-layered cybersecurity strategy based on the NIST framework, with oversight from the Audit Committee - HCTI utilizes a multi-layer cybersecurity approach based on the **National Institute of Standards and Technology (NIST) framework**, involving a dedicated team and external assessments[165](index=165&type=chunk) - The **Audit Committee provides board-level oversight**, reviewing the cybersecurity program annually and receiving quarterly updates on risks[167](index=167&type=chunk) - The company manages third-party service provider risks by performing risk assessments, requesting **SOC 2 reports**, and incorporating risk assurance into contracts[169](index=169&type=chunk) - Although cybersecurity risks exist, threats such as malware and phishing **have not materially affected the business** to date[171](index=171&type=chunk) [Properties](index=41&type=section&id=Item%202.%20Properties) The company does not own any real estate and leases its primary office in California and a satellite office in New Jersey - The company's principal executive office is leased at 7901 Stoneridge Drive, Suite 220, Pleasanton, CA 94588[172](index=172&type=chunk) - A satellite office is leased at 666 Plainsboro Road, Suite 448, Plainsboro, NJ 08536[172](index=172&type=chunk) - The company does not currently own any real estate[172](index=172&type=chunk) [Legal Proceedings](index=41&type=section&id=Item%203.%20Legal%20Proceedings) As of the report date, the company is not aware of any actual, pending, or threatened litigation - The company has not been made aware of any actual, pending, or threatened litigation[173](index=173&type=chunk) [Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business - Not applicable[174](index=174&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=42&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq (HCTI), with no history of dividend payments and plans to retain future earnings - The company's common stock is traded on the Nasdaq Capital Market under the symbol **"HCTI"**[176](index=176&type=chunk) - The company has **never declared or paid a cash dividend** and intends to retain future earnings to finance operations[177](index=177&type=chunk) Equity Compensation Plan Activity | Plan category: | Number of Securities to be issued Upon Exercise of Outstanding Options, Warrants, and Rights (a) | Weighted Average Exercise Price of Outstanding Options (b) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (c) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by stockholders | 276,500 | $ 3.7 | 1,023,050 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) FY2023 revenue decreased 28% to $33.2 million, net loss widened to $12.3 million, and the company's liquidity position weakened Key Financial Results | | 2023 (In thousands) | 2022 (In thousands) | Change (%) | | :--- | :--- | :--- | :--- | | **Revenue** | $ 33,203 | $ 45,886 | (28)% | | **Cost of revenue** | $ 26,426 | $ 34,591 | (24)% | | **Net (loss)** | $ (12,339) | $ (9,610) | (28)% | - Revenue from the **top 5 customers accounted for 77% of total revenue** in 2023, an increase in concentration from 72% in 2022[222](index=222&type=chunk) - Research and development expenses saw a **significant decrease of 87%** to $0.8 million in 2023 from $5.9 million in 2022[226](index=226&type=chunk) - Depreciation and amortization expenses **increased by 114%** to $7.2 million in 2023, compared to $3.4 million in 2022[230](index=230&type=chunk) - The company's liquidity position has tightened, with the **current ratio decreasing from 1.3 in 2022 to 0.7 in 2023**[241](index=241&type=chunk) [Results of Operations](index=49&type=section&id=Results%20of%20Operations) Total revenue fell 28% to $33.2 million in 2023, driven by declines across all service segments and widening the net loss Revenue by Segment | Revenue by Segment | 2023 (In thousands) | 2022 (In thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Software Services | $ 21,132 | $ 25,883 | (18)% | | Managed Services and Support | $ 10,452 | $ 15,178 | (31)% | | Platform Services | $ 1,619 | $ 4,825 | (66)% | | **Total Revenue** | **$ 33,203** | **$ 45,886** | **(28)%** | Operating Profit (Loss) by Segment | Operating Profit (Loss) by Segment | 2023 (In thousands) | 2022 (In thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Software Services | $ (2,507) | $ (1,381) | (82)% | | Managed Services and Support | $ 2,755 | $ 4,481 | (39)% | | Platform Services | $ (649) | $ (4,489) | 86% | | **Total segment operating profit (loss)** | **$ (401)** | **$ (1,389)** | **(71)%** | [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity weakened with a current ratio of 0.7, financing operations through operating cash flows and new debt Liquidity Metrics | Liquidity Metrics | As of Dec 31, 2023 | As of Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $1.2 million | $1.3 million | | Current Ratio | 0.7 | 1.3 | | Debt to Equity Ratio | 9.8 | 0.2 | Cash Flow Summary (In thousands) | Cash Flow Summary (In thousands) | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Cash flows used in operating activities | $ (1,612) | $ (2,600) | | Cash flows used in investing activities | $ (13) | $ (3,319) | | Cash flows provided by financing activities | $ 1,518 | $ 5,490 | - In 2023, the company raised funds through a Senior Secured 15% Original Issue Discount Convertible Promissory Note, receiving the **first tranche of $2 million**[247](index=247&type=chunk) [Financial Statements and Supplementary Data](index=56&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The auditor's report includes a "going concern" warning due to operating losses, alongside the consolidated financial statements - The independent auditor's report includes a **"going concern" paragraph**, citing the company's operating losses as raising substantial doubt about its ability to continue operations[256](index=256&type=chunk) Consolidated Balance Sheet (In thousands) | Consolidated Balance Sheet (In thousands) | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $ 5,729 | $ 7,749 | | Total Assets | $ 10,049 | $ 20,763 | | Total Current Liabilities | $ 8,123 | $ 6,148 | | Total Liabilities | $ 9,511 | $ 8,375 | | Total Stockholders' Equity | $ 538 | $ 12,388 | Consolidated Statement of Operations (In thousands) | Consolidated Statement of Operations (In thousands) | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net Revenue | $ 33,203 | $ 45,886 | | Loss from Operation | $ (11,348) | $ (10,416) | | Net Loss | $ (12,339) | $ (9,610) | | Net loss per share—basic and diluted | $ (2.92) | $ (2.63) | - Subsequent to year-end, the loss of a major customer led to a **non-recurring impairment loss of $3.025 million** on customer relationships and **$1.17 million on goodwill**[308](index=308&type=chunk)[311](index=311&type=chunk)[405](index=405&type=chunk) - In December 2023, the company entered into a securities purchase agreement for up to **$5.2 million in Senior Secured Convertible Promissory Notes** and received the first tranche of $2.0 million[359](index=359&type=chunk)[362](index=362&type=chunk) [Controls and Procedures](index=88&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that both disclosure controls and internal controls over financial reporting were effective as of year-end 2023 - Management concluded that the company's **disclosure controls and procedures were effective** as of December 31, 2023[407](index=407&type=chunk) - Based on an assessment using the COSO framework, management concluded that the company's **internal control over financial reporting was effective** as of December 31, 2023[408](index=408&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=89&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The board comprises four directors, three of whom are independent, with established Audit, Compensation, and Governance committees - The board of directors consists of four members, with Dave Rosa as Chairman, and **three of the four directors are determined to be independent**[414](index=414&type=chunk)[428](index=428&type=chunk)[433](index=433&type=chunk) - Anand Kumar was appointed **Interim Chief Executive Officer**, effective March 15, 2024[414](index=414&type=chunk)[418](index=418&type=chunk) - The board has three standing committees: **Audit, Compensation, and Nominating and Corporate Governance**, each composed of independent directors[434](index=434&type=chunk) [Executive Compensation](index=95&type=section&id=Item%2011.%20Executive%20Compensation) This section details compensation for named executive officers, including salary, bonuses, and outstanding equity awards for 2022 and 2023 Summary Compensation Table | Name and Principal Position | Year | Total ($) | | :--- | :--- | :--- | | Thyagarajan Ramachandran (CFO) | 2023 | 295,303 | | | 2022 | 145,317 | | Lakshmanan Kannappan (Head of Strategic Partnership) | 2023 | 216,484 | | | 2022 | 200,008 | | Shibu Kizhakevilayil (Head of M&A) | 2023 | 238,368 | | | 2022 | 256,892 | - The report details outstanding stock option awards for named executive officers as of December 31, 2023, with various exercise prices and expiration dates[447](index=447&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=96&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) SecureKloud Technologies, Inc. is the controlling stockholder with 59.2% beneficial ownership of the company's common stock Beneficial Ownership | Name of Beneficial Owner | Title | Common Stock | Percent of Common Stock | | :--- | :--- | :--- | :--- | | Officers and Directors as a Group | | 108,835 | 2.5% | | SecureKloud Technologies, Inc. | 5% Stockholder | 2,550,000 | 59.2% | - **SecureKloud Technologies, Inc. is the majority owner with 59.2%** of common stock, and is itself 60.7% owned by SecureKloud Technologies Limited, a public company in India[454](index=454&type=chunk) [Certain Relationships and Related Party Transactions, and Director Independence](index=98&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Party%20Transactions%2C%20and%20Director%20Independence) The company engages in significant related party transactions with its parent for services and office space, all charged at cost Transactions with Parent Company | Transaction with Parent (SecureKloud Technologies, Inc.) | 2023 (In thousands) | 2022 (In thousands) | | :--- | :--- | :--- | | Services received under Master Service Agreement | $5,445 | $14,063 | | Services received under Shared Services Agreement | $377 | $197 | | Rent paid under Sublease Agreement | $235 | $180 | - The company also entered into a Master Services Agreement with its Ultimate Parent, receiving services amounting to **$650,000 in 2023**[460](index=460&type=chunk) - The balance receivable from related parties was **$304,000 as of December 31, 2023**, down from $1,075,000 in 2022[461](index=461&type=chunk) [Principal Accountant Fees and Services](index=98&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Total fees paid to the independent auditor, BF Borgers CPA PC, increased to $313,500 in 2023 from $165,875 in 2022 Accountant Fees | Fee Type | 2023 | 2022 | | :--- | :--- | :--- | | Audit fees | $ 285,000 | $ 165,875 | | Administrative fees | $ 28,500 | $ - | | **Total fees** | **$ 313,500** | **$ 165,875** | Part IV [Exhibits, Financial Statement Schedules](index=99&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all documents filed with the Form 10-K, including financial statements and various corporate agreements

Financial Performance - Net revenue for Q3 2023 was $7,779,000, a decrease of 34.3% compared to $11,950,000 in Q3 2022[21] - Net loss for Q3 2023 was $1,943,000, compared to a net loss of $2,339,000 in Q3 2022, showing an improvement of 15.9%[21] - Net income for the nine months ended September 30, 2023, was a loss of $7,007,000 compared to a loss of $4,747,000 in the same period of 2022[26] - Total revenue for the nine months ended September 30, 2023, was $26,143,000, a decrease of 24% from $34,594,000 in 2022[47] - Revenue for the quarter ended September 30, 2023, decreased by $4.2 million, or 35%, to $7.78 million compared to $11.95 million for the same quarter in 2022[190] Expenses and Costs - Operating expenses for Q3 2023 were $3,231,000, a reduction of 43.1% from $5,675,000 in Q3 2022[21] - Research and development expenses significantly decreased to $54,000 in Q3 2023 from $1,471,000 in Q3 2022, a drop of 96.3%[21] - Sales and marketing expenses increased to $1.1 million, or 14% of total revenue, for the quarter ended September 30, 2023, compared to $1.8 million, or 15%, for the same quarter in 2022[189] - General and administrative expenses for the quarter ended September 30, 2023, were $1.36 million, or 18% of total revenue, compared to $1.48 million, or 12%, for the same quarter in 2022[189] - Interest expenses increased by $0.36 million, or 655% to $0.42 million for the quarter ended September 30, 2023, compared to $0.05 million for the same quarter in 2022[198] Assets and Liabilities - Total assets decreased to $14,466,000 as of September 30, 2023, down from $20,763,000 as of December 31, 2022, representing a decline of 30.5%[19] - Total stockholders' equity decreased to $6,127,000 as of September 30, 2023, down from $12,388,000 as of December 31, 2022, a decline of 50.6%[19] - Total current liabilities increased to $6,852,000 as of September 30, 2023, compared to $6,148,000 as of December 31, 2022, an increase of 11.4%[19] - Cash and cash equivalents fell to $75,000 as of September 30, 2023, down from $1,341,000 as of December 31, 2022, a decrease of 94.4%[19] - Total cash, cash equivalents, and short-term investments decreased to $0.08 million as of September 30, 2023, from $4.14 million as of September 30, 2022[208] Operational Performance - The company reported a loss from operations of $1,524,000 in Q3 2023, compared to a loss of $2,247,000 in Q3 2022, reflecting a 32.2% improvement[21] - For the three months ended September 30, 2023, the total segment operating loss was $108, a decrease of 58% compared to a profit of $260 in the same period of 2022[49] - Software services reported an operating loss of $703 for the three months ended September 30, 2023, which is a 385% increase in loss compared to a loss of $145 in 2022[49] - Managed services and support generated $709 in operating profit for the three months ended September 30, 2023, down 49% from $1,397 in 2022[49] - Platform services saw a significant turnaround with an operating profit of $102 for the three months ended September 30, 2023, compared to a loss of $992 in the same period of 2022, marking a 110% change[49] Customer Concentration - The top customer contributed $4,168, accounting for 54% of revenue for the three months ended September 30, 2023, compared to $4,562 and 38% in the same period of 2022[50][51] - For the quarter ended September 30, 2023, revenue from the top five customers accounted for approximately 78% of total revenue, compared to 76% for the same period in 2022[95] Acquisitions and Goodwill - The Company acquired Cornerstone Advisory Services LLC for a total consideration of $7,000,000, allocated to net working capital of $4,700,000 and intangibles of $2,300,000[107] - The Company recognized a liability for the estimated fair value of contingent consideration related to the acquisition of Devcool, Inc., amounting to $1,487,000[90] - The total purchase price for the acquisition of Devcool Inc. was $7,773,000, which included $4,500,000 in cash and $700,000 in equity[109] - The company recorded $1,289,000 of goodwill from the acquisition, which is not tax deductible[112] Stock and Shareholder Information - Weighted average shares outstanding increased to 4,228,340 in Q3 2023 from 3,602,289 in Q3 2022, an increase of 17.4%[21] - The Company has reserved 600,000 shares of common stock under the "2020 Stock Incentive Plan"[92] - As of September 30, 2023, the Company had nil uninsured cash balances, down from $816,000 as of December 31, 2022[96] - As of September 30, 2023, there was $546 thousand of unrecognized share-based compensation expense related to unvested options, expected to be recognized over approximately two years[143] Future Outlook - The company expects to continue increasing its investment in sales and marketing to support business growth, which may lead to higher expenses in absolute dollar terms[180] - The company anticipates that its employee strength will increase due to investments in scaling the business[163] - The company is currently evaluating the impact of new accounting pronouncements on its consolidated financial statements[130]

Financial Performance - Net revenue for Q2 2023 was $8,526,000, a decrease of 26.6% compared to $11,588,000 in Q2 2022[22] - For the six months ended June 30, 2023, revenue was $18,364,000, down 19% from $22,644,000 in the same period of 2022[48] - Revenue for the quarter ended June 30, 2023, decreased by $3 million, or 26%, to $8.5 million compared to $11.5 million for the same quarter in 2022[186] - The operating loss for the three months ended June 30, 2023, was $(1,595,000), an increase in loss of 11% from $(1,433,000) in the same period of 2022[49] - The total segment operating profit decreased by $0.49 million, or 65%, to $0.26 million for the quarter ended June 30, 2023, compared to $0.75 million for the same quarter in 2022[201] Assets and Equity - Total assets decreased to $16,068,000 as of June 30, 2023, down from $20,763,000 as of December 31, 2022, representing a decline of 22.5%[20] - Total stockholders' equity decreased to $8,051,000 as of June 30, 2023, down from $12,388,000 at the end of 2022, a decline of 34.8%[20] - As of June 30, 2023, the company reported total intangible assets of $16,473,000, with net carrying amounts of $8,921,000 after accumulated amortization[98] Cash Flow and Expenses - Cash and cash equivalents dropped to $132,000 at the end of Q2 2023, down from $1,341,000 at the end of 2022, a decrease of 90.2%[20] - The company experienced a net cash used in operating activities of $(2,826,000) for the six months ended June 30, 2023, compared to $602,000 provided in the same period of 2022[28] - Cash inflow from financing activities was $1.6 million for the six months ended June 30, 2023, compared to $1 million for the same period in 2022[212] Customer Concentration - The top customer contributed $4,519,000, accounting for 53% of total revenue for the three months ended June 30, 2023, compared to 39% in the same period of 2022[50][51] - For the quarter ended June 30, 2023, revenue from the top five customers accounted for approximately 81% of total revenue, compared to 73% for the same quarter in 2022[94] Research and Development - Research and development expenses were $102,000 in Q2 2023, significantly lower than $646,000 in Q2 2022, reflecting a decrease of 84.2%[22] - The company’s research and development expenses primarily consist of employee-related costs for software developers and engineers, aimed at enhancing cloud-based platform applications[174] Debt and Liabilities - The company has a credit facility from Seacoast business funding with a balance of $2,352 thousand as of June 30, 2023, compared to $3,212 thousand at December 31, 2022[120] - The debt-to-equity ratio increased to 0.45 for the quarter ended June 30, 2023, compared to 0.20 for the quarter ended December 31, 2022[203] Stock and Equity Compensation - The company has reserved 600,000 shares under the "2020 Stock Incentive Plan" for stock-based compensation[91] - As of June 30, 2023, the company had 84,356 unvested options with a weighted average grant date fair value of $3.7 per option, and $309 thousand of unrecognized share-based compensation expense related to these options[141][142] Legal and Regulatory - The company has not been involved in any legal proceedings that could materially affect its financial condition[132] - The company is currently evaluating the impact of new accounting pronouncements on its consolidated financial statements[129] Business Strategy and Market Position - The company continues to focus on digital transformation and cloud solutions for the healthcare sector, leveraging technologies such as AI and Big Data[30] - Healthcare Triangle, Inc. is in the early stages of marketing its SaaS offerings, including DataEz, CloudEz, and Readabl.AI, with uncertain impacts on future revenue growth[164] - The company anticipates increasing its employee strength due to investments in sales and marketing to promote solutions in various geographies[162]